Links and Resources Covered:

Introduction

Today I’m excited to have Randy Cass on the show who is the CEO of Nest Wealth, a top robo advisor service here in Canada.

Now if you’re not sure what I robo advisor service is then don’t worry, we cover that in depth in the interview. But, in a nutshell, it’s basically the easiest way that you can partake in index investing. You just have to answer several questions regarding your investing goals and circumstances, deposit the money that you want to invest, and they take care of it all for you.

You don’t have to build your own portfolio, you don’t have to do your own trades, you just transfer the money you want to invest, and they take care of the entire investing portion for you.

What’s also really neat is that you can even automate it so that a set amount of money from your paycheque gets invested automatically every month. This is a really nice way to stay disciplined, pay yourself first, and is something that you can’t do if you’re just investing totally by yourself since the do-it-yourself services like the one that I use don’t offer that level of automation so it’s a really nice feature that you get.

Ultimately, it’s a really nice offering for Canadians, and is especially a great option for those just getting started, and for those that want to switch from expensive mutual funds to much less expensive ETFs.

It’s also a really good option if you’ve known that you should be investing for a while, but keep procrastinating on it. There’s a fair bit to learn if you are doing it all yourself so it’s really easy to procrastinate on things like this as not everyone wants to read and learn about investing after work and on weekends. In other words, this is one of the easiest way to get into the investing world, while minimizing the potential mistakes that you can make.

Now if you’re a long time listener of the show, you may be surprised that I’m actually endorsing robo advisors, since of course, they do charge a bit in fees for the services that they offer in exchange for the massive convenience you get in return.

As you know, I’m very keen on keeping fees as low as possible as that is one of the biggest factors that will impact how much your portfolio will earn over time. But, the thing that attracted me to Nest Wealth, is that their fee isn’t a percentage of your portfolio like it is with the other robo advisors and this can actually save you a lot of money over the long term.

This is actually a big deal because as your portfolio gets larger, the annual fees that you pay with other robo advisors really start to climb.

For example let’s say you’ve been investing for a while and your portfolio is $150,000. Well, if your robo advisor charges a 0.5% percent fee, then that means you’re paying a fee of $750 per year.

That’s a fair bit of money to be spending on fees per year. Contrast that to Nest Wealth where you’re just paying a flat fee of $40/month. In other words, you’re saving $270 dollars per year just because you went with flat pricing instead of a fee based on a percentage of your assets.

As you can imagine, these savings become larger and larger as your portfolio grows because you aren’t paying a fee as a percentage of your portfolio size. For example, if your portfolio is eventually $500,000, then you’re paying Nest Wealth $80/month for the service which is what their monthly fee is capped at so you won’t pay any more than this no matter how large your portfolio gets.

Contrast that if you go with a robo advisor that let’s say charges you 0.4% to manage that amount (and this is actually what many robo advisors charge for managing an amount that’s this large at the time of this recording, in Canada). So that means that you’re paying a typical robo advisor $2,000 per year to manage that $500,000 portfolio, whereas with Nest Wealth, you’re only paying $960.

So in this example, you’re actually saving $1,040 per year by going with a fixed rate model that Nest Wealth offers, vs a percentage based model that the rest of the other robo advisors offer.

In other words, because you have a flat fee that is capped over at Nest Wealth, you’re no longer being charged more and more for the exact same service as your investment portfolio grows. To me that’s really appealing and as you can see by my math, you could be saving over 50% per year by going with this fixed rate model with Nest Wealth.

Now as much as I like this type of setup and is what first attracted me to Nest Wealth, I’ll definitely give you my full disclosure here and say that I still choose to do everything myself just because I personally find it really easy to do, I enjoy it, and of course, doing it yourself is what lets you have the most control over what you invest in and will result in you paying the lowest fees possible, if you do it properly.

Now with that said, I’ve realized over the years that not everyone is like me in that regard. Just like there are many people that would rather get their oil changed by a mechanic than do it themselves, the same goes for investing. There are definitely many Canadians out there that are happy to pay a bit in fees if it means they get the time-saving components that robo advisors offer such as automatic rebalancing, automatic portfolio creation, and automatic investing where you can actually set it up so that money is automatically taken from every paycheque and invested.

I’m personally willing to do these things myself to save on the fees, but I totally understand that not everyone wants to, or has the interest to learn how to do it themselves. That’s where robo advisors like Nest Wealth come in.

So here’s the thing, if you want to learn how to do it yourself to pay the lowest fees possible and have that extra level of control, then you can of course try out the do-it-yourself investing course that I have on the site, where I show you how to do everything step by step, so that you can look over my should, see exactly how I invest every single month to pay the lowest fees possible.

This is exactly the method that my wife and I used to help us become financially independent at the age of 32, so if that is something that you want to learn more about, you can try out the entire course risk free for 2 months here. And of course as a student you can ask me questions there too, and you get priority over the dozens and dozens of questions that I get asked from the show.

Now if however, you’re okay with paying a bit in fees for all the automation and time saving features, then at least try out Nest Wealth, as I’ve actually arranged a deal with them for Build Wealth Canada listeners where you can try them for free for 3 months. All you have to do is go through the special link that we set up to get the 3 months free which is here.

Now if you’re not sure which type of investing is right for you (i.e. Do-it-yourself vs. robo advisor), then you can actually sample both risk free, and then decide which type of investing is best suited for you:

The investing course comes with a 60 day full money-back guarantee so you can actually go through the entire course if you want, and if you decide it’s not for you, just send me an email and you’ll get a full refund, no question’s asked.

At the same time you can sample Nest Wealth for free for 3 months so you can test them out and see if the added convenience and automation are worth the fees for you.

Ultimately, you can try out both options for several months, risk free, and then you can decide which option is a better fit for you.

At that point if you decide that Nest Wealth is a better fit for you, you can just get a full no questions asked refund for the course by sending me a quick email, or if you decide that you do want to do it all yourself to save on the fees, then you can just cancel your Nest Wealth membership before your free 3 month trial is over.

Also, you can try out the do-it-yourself investing course risk free for 2 months so you can actually learn how to do it all yourself and pay the lowest possible fees by going here.

Alright, now as I mentioned earlier, today’s guest is Randy Cass who the CEO, founder, and portfolio manager at Nest Wealth.

Randy brings over 15 years experience in the financial services industry to Nest Wealth. Prior to founding Nest Wealth, Randy managed quantitative portfolios at the Ontario Teachers’ Pension Plan and institutional assets at Orchard Asset Management. Randy’s previous company, First Coverage, won multiple awards as a top start-up including a financial services Morningstar award for best use of Technology in Canada before it was ultimately sold in 2011. Randy hosted Market Sense on BNN between 2012 and 2014.

Ultimately, Randy is committed to providing Canadians with a personalized and professional wealth management solution that lets them keep more of their money.

Click here to listen to the full episode on iTunes, or click here to download the full episode now.

Questions Covered:

1. For those just getting started in investing, can you explain what a robo advisor service is, and especially why we as Canadians should care?

2. When you build investment portfolios for Canadians, why are ETFs such a core part of your portfolios? (perhaps explain what an ETF is first for all the listeners just getting started with this)

3. Nest Wealth mentions that you manage the money based on proven investing principles and Nobel Prize-winning theories. Can you elaborate on the Nobel Prize-winning theories component?

4. One thing I noticed on your Nest Wealth site, is that you actually list all the ETFs you buy (which is nice, I really like that transparency), but if I’m just a regular Canadian, why don’t I just buy the ETFs myself through a discount brokerage (especially since some discount brokerages let me buy ETFs for free) and then save on the fees that Nest Wealth charges?

5. Anybody following the financial services industry knows that there are a LOT of robo advisor services out in Canada. What sets Nest Wealth apart from all the rest?

5.a. One of the things that really intrigued me when I first heard of you guys is that you have a flat fee model. For those not familiar, can you explain what that is and why it’s actually a pretty big deal?

5.b. You mention that your portfolios are “custom built” unlike your competitors. Can you elaborate how this works and why it’s so important?

6. I imagine that a big concern Canadians have is that with all these robo advisor companies out there, it’s totally conceivable that not all of them will survive long term. Because of this, it wouldn’t surprise me if some Canadians are holding back from investing because they are afraid of losing all their money if something was to ever happen. Can you speak to this concern?

7. What customer support do you offer? Ex. If somebody has questions while going through the automated portfolio building process?

What about after all is set up?

8. One of the other things that intrigued me was that on your site you mention that as a client you get your own portfolio manager that you can speak with, text or call. What types of things is a Portfolio Manager ideally suited to help you with? And what types of question are beyond the scope of a Portfolio Manager like this? (I’m trying to gauge what kind of other professionals you need on your team apart from Nest Wealth).

10. I went through Nest Wealth and had it build a portfolio for me. I noticed that there were different goals that you can select, and I assume Nest Wealth will optimize your portfolio, depending on your goal correct?

How does Nest Wealth change what portfolio it recommends depending on whether somebody is savings for retirement vs is already retired and now needs the income instead of growth?

What about if they’re saving for something like a down payment on a home or post-secondary education for their child? What’s the strategy behind those types of portfolios?

11. I noticed Nest Wealth will build your portfolio based on your questions, but it won’t actually tell you whether you will be able to actually retire by an age you specify, and whether your income in retirement is sustainable. Is that because that is an area where you actually need a financial planner to do a more in-depth, 1-on-1 personalized analysis with you?

12. How is the MER absorbed? Is that covered by the monthly fee? What about other fees?

13. To close things off, who is Nest Wealth not for?

ex. Those with credit card debt?

13. Who is Nest Wealth ideally for? What type of person benefits most from what your service?

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